Cleveland v. United States
Citation: 531 U.S. 12 (2000)
Facts
Cleveland applied for video poker licenses in Louisiana, making misrepresentations in his application. The government prosecuted him under the mail fraud statute, arguing that the state’s interest in the unreleased licenses was “property” of the state that Cleveland’s fraud deprived the state of.
Issue
Are state video poker licenses “property” in the hands of the state for purposes of the federal mail fraud statute?
Holding
No. State licenses are not “property” of the state in the hands of the licensor. The state’s interest in issuing licenses is regulatory rather than proprietary. The mail fraud statute reaches fraud depriving a victim of property, not fraud in the licensing context where the government functions as a sovereign regulator.
Rule
Mail fraud — “property” of the sovereign: Licenses issued by the government are not “property” of the state in the licensor’s hands for mail fraud purposes. The government’s exercise of its licensing authority is regulatory, not proprietary. A license applicant who defrauds the state in the licensing process does not commit mail or wire fraud against the state’s “property.”
Significance
- Significantly narrowed the scope of mail fraud as applied to government licenses
- Builds on McNally v. United States — both cases limit the property concept in mail fraud
- The government could still prosecute Cleveland under other theories (honest services fraud, if bribery was involved; state law)
- Illustrates the limitation that the mail/wire fraud statutes protect against schemes to defraud victims of their property — the property must be something the victim has or expects to have